New research reveals 'ethnic price gap' for Airbnb rentals

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Renting out rooms on Airbnb has become a reliable income stream for home-owners across the world, but according to a new study released today, hosts from ethnic minority groups may receive less money for their listings than other hosts.

The report, entitled Let's Stay Together? Combating discrimination on Airbnb, is published by the Social Market Foundation and uses analysis from the University of Warwick’s CAGE research centre. It reveals that people from ethnic minorities who list their property on the accommodation sharing platform have a per-night price which is on average 3.5% lower than those for non-minority hosts with equivalent properties. This figure rises to 6% for London listings specifically, which account for 10% of the study’s sample.

The survey was set up following claims of discrimination on the platform on the part of guests and hosts. The large-scale research looked at over 350,000 properties in nineteen major cities across North America and Europe. The proportion of ethnic minority hosts varies according to the city, with 11.4% of hosts in New York fitting into the category, versus only 0.8% in Rome, for example.

However the report also found that the price gap reduces as the number of reviews for a given listing increase, narrowing to insignificance when the host has over twenty reviews.

The report’s co-author Roland Rathelot, who is Assistant Professor of Economics at the University of Warwick, concluded that Airbnb hosts from ethnic minorities are victims of “statistical discrimination”, the impact of which could be mitigated if Airbnb users were provided with more comprehensive information on the properties.

“If, on average, listings proposed by ethnic minority hosts are of lower quality, but higher-quality ones have limited ways to signal how good they are, guests will use the information about ethnicity to penalise ethnic-minority listings, who then get lower demand and have to set lower prices.” said Rathelot. “More sophisticated models of statistical discrimination allow guests’ beliefs to be proven erroneous.”

Airbnb commissioned a report on these issues, which was published in September 2016, entitled ‘Airbnb’s Work to Fight Discrimination and Build Inclusion.’ The report’s writer, a former senior staffer at The American Civil Liberties Union, proposed increasing the on-site prominence of “objective information” and “reducing the prominence of guest photos in the booking process” in order to mitigate the potential for prejudicial decision making.

“We are always eager to hear from people who share our commitment to fighting bias and discrimination. We know giving hosts and guests more information can help fight bias. That's why we're working on tools that will help hosts and guests learn more about one another and have announced a range of initiatives that will help fight discrimination.”